Sin­ga­pore top spot for Chi­nese over­seas in­vest­ments, says re­port

The Jakarta Post - - INTERNATIONAL - Stephanie Luo

Sin­ga­pore has sur­passed the United States to emerge as the top des­ti­na­tion for over­seas in­vest­ments from China in this year's China Go­ing Global In­vest­ment In­dex 2017.

Ac­cord­ing to the re­port find­ings which were re­leased on Thurs­day by The Econ­o­mist In­tel­li­gence Unit (EIU), the US fell behind Sin­ga­pore to take the sec­ond spot, while Hong Kong, Malaysia and Australia came in third, fourth and fifth re­spec­tively.

The re­port, which cov­ered the au­to­mo­tive, con­sumer goods, en­ergy fi­nan­cial ser­vices, and health­care sec­tors, said: "Malaysia and Sin­ga­pore stand out as at­trac­tive BRI [Belt and Road Ini­tia­tive] des­ti­na­tions, pro­vid­ing an in­vest­ment en­vi­ron­ment that of­fers op­por­tu­ni­ties as well as low lev­els of risk."

It pointed out that ef­forts by Chi­nese com­pa­nies to de­velop a global cut­ting-edge in ar­eas such as elec­tric ve­hi­cles, fi­nan­cial tech­nol­ogy, and re­new­able en­ergy are in­creas­ingly shap­ing ODI (over­seas di­rect in­vest­ment) ef­forts.

Internet gi­ants such as Ten­cent and Alibaba were cited as com­pa­nies that are in­vest­ing in ecom­merce start-ups across Asia.

Since the pre­vi­ous up­date to the in­dex in 2015, the re­port found that de­vel­oped mar­kets re­main the most at­trac­tive des­ti­na­tions for Chi­nese in­vest­ments, but that de­vel­op­ing economies have seen the most no­table gains.

In the 2015 re­port, Sin­ga­pore took the sec­ond spot as the most at­trac­tive des­ti­na­tion for Chi­nese for­eign in­vest­ments, while the US came out top.

Australia was third then, while Hong Kong and Malaysia were in the sev­enth and 21st po­si­tions.

The im­prove­ment in rank­ings of coun­tries such as Malaysia, Kaza­khstan, Thai­land and Iran were also at­trib­uted to China's Belt and Road Ini­tia­tive, which has cre­ated ad­di­tional in­cen­tives for Chi­nese com­pa­nies to in­vest­ment in coun­tries along the route.

How­ever, ten­sions in trade and for­eign bi­lat­eral re­la­tions with China have caused a drop in the rank­ing of sev­eral ma­jor economies, in­clud­ing the US and In­dia. Com­pli­cated do­mes­tic pol­i­tics and dim­mer eco­nomic prospects have low­ered the in­dex rank­ings of Brazil and the United King­dom, the re­port added.

Ac­cord­ing to the com­merce min­istry, Chi­nese non-fi­nan­cial ODI flows into BRI coun­tries grew by 18.2 per cent, to US$14.8 bil­lion, in 2015. In 2016, how­ever, ODI into BRI coun­tries con­tracted by 2 per cent to US$14.5 bil­lion, and have also "strug­gled" in 2017.

In the Jan­uary-Septem­ber year-to-date, Chi­nese ODI to BRI coun­tries fell by 13.7 per cent.

"The out­look for China's over­seas di­rect in­vest­ment ap­pears to have dimmed. Af­ter a bumper year for deal-mak­ing in 2016, ODI flows from China slumped by over 40 per cent year-on-year in the first 10 months of 2017," the re­port said.

While not­ing the steep fall in Chi­nese ODI in 2017 amid stepped up reg­u­la­tory over­sight of ODI flows, the re­port said that the drop is likely to be tem­po­rary. The driv­ers behind ODI in re­cent years — a de­sire to tap new mar­kets and ac­quire brands and tech­nol­ogy — re­main in place.

Dan Wang, China an­a­lyst, EIU, said: "It is still an ex­cit­ing time to be watch­ing the in­ter­na­tional ex­pan­sion of cor­po­rate China, but firms should be se­lec­tive about the re­gions, coun­tries and in­dus­tries they choose to en­gage."

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